OK - I got a great investment opportunity for you. Sshh - don't tell anybody, I'm gonna let you in on the ground floor. Here it is. You invest $1 trillion and get absolutely nothing in return. I know - I know sounds like a deal huh?
If you think that is a bad investment keep reading because that is exactly what we are about to see when the student loan bubble bursts.
The Consumer Financial Protection Bureau came out with a study suggesting that student debt has hit $1 Trillion. Wow That's a lot of scratch, we must have the most educated folks in the world if we've spent that much on college education. But wait here are a few other facts via College Board Advocacy & Policy Center:
- It takes about 5 years to earn a degree
- Only 57% earn a degree within 6 years
- Of those who earn a degree most are in useless disciplines
OK so after 5 to 6 years you graduate with a Women's or African Studies degree, spending 10's of thousand (public university) 100's of thousand (private university) along the way, and once you are out you can't understand why no one will hire you.
Wait a minute at this point I want to show you something:
|That's my shocked face!|
The way we look at a college education this day is wildly distorted. From birth we were trained to think that 1) we had to go to college or we would be shoveling shit in the pig sty 2) Follow your heart and you will succeed 3) everybody else is doing it so you have to as well.
Unfortunately there is no market rationalization in the decision process. Nobody told you that if you spend a fortune getting a Fashion Design degree from Notre Dame that there is a 99.9% chance you will be waiting tables after graduation and owe $300,000. No one said to the prospective Library Science major that there are enough Library Science graduates each year to staff every single library in the world twice over.
|My early morning shocked face!|
So ultimately what this means is that consumers have borrowed $1 trillion dollars (most from taxpayers) betting it on future revenue in Fashion Design, Women's Studies, African Studies, Library Sciences etc. If my broker came to me with this proposition as a long-term investment I'd fire him. But unfortunately that's what we are stuck with thanks again to the wisdom of our elected officials who consistently make unbelievably bad decisions with our money.
How do we fix this? We have to make the prospective graduate and the university pay the price for stupid decisions. If someone chooses to get a degree that is perfectly worthless or the university offers a degree that is perfectly worthless then the taxpayers have the right to NOT fund it. If someone decide to get a degree in something worthwhile then we can talk. What ticks me off is the fact that the folks funding this boondoggle (taxpayers) don't have a say.
Put another way, if my daughter came to me and said she got accepted to Stanford and she was majoring in Women's studies I'd say good luck with that. If she wants me to pay it is incumbent upon her to show me what I will get for my investment. If it's waiting tables after 4 years I would just have to turn that one down.